By Spencer Williams | November 12, 2018

The Department of Labor (DOL) has issued its 11/06/18 Advisory Opinion 2018-01A on Auto Portability, which can be accessed on the DOL’s website at this link.

The DOL’s Advisory Opinion states that defined contribution plan sponsors who accept automatic rollover contributions under auto portability will not be a fiduciary with respect to those contributions. This fiduciary “safe harbor” represents an important step to facilitate auto portability’s widespread adoption by plan sponsors, as well as their recordkeepers. Once adopted, there’s ample evidence to show that auto portability’s results will dramatically improve Americans’ retirement security.

A Private-Sector Solution to the Problem of Rampant 401(k) Cashout Leakage
Auto portability is a private sector innovation in response to the problem of 401(k) cashout leakage, providing seamless portability for retirement plan participants, when they change jobs.

Each year, 14.8 million, or 22% of all defined contribution plan participants will change jobs. Of these, 4.7 million, or 31%, will cash out their retirement savings completely within the first year after job change. Two-thirds of these cashouts are for reasons other than a financial emergency, and research and experience have proven that retirement savings portability can reduce post-separation cashouts by over 50%.

As conceived, auto portability is designed to meet the needs of participants subject to the mandatory distribution provision of their employer-sponsored plan, complementing the existing automatic rollover process. When a job-changing participant becomes subject to an automatic rollover, auto portability works with participating recordkeepers and their plan sponsors to locate & match the forced-out participant in their current-employer’s plan, and to automatically transfer their previous-employer’s plan balance into their new plan via an automatic roll-in. Auto portability has been live and in use in the 401(k) market since July, 2017.

Learn More About Auto Portability
To learn more about auto portability, visit, email or call RCH at (866) 827-9608.